Total Commonwealth Revenue from Taxation, Services and Fees. The Estimated Cost of Federation. In the Federal Convention debates official estimates and speeches delivered during the Federal campaign 1898, it was generally stated and agreed that the new Federal expenditure consequent on the establishment of a Commonwealth Government and Federal institutions departments and services would be about £300,000; that the expenditure in connection with old Colonial services and departments taken over from the States would be about £1,250,000, and that thus the annual cost of Federation including the new and the old services would be about £1,550,000. (The Hon. EDMUND BARTON'S speech at Town Hall, Sydney; the Hon. P. M. GLYNN'S paper on Federal Expenditure 1898). The States surrendered to the Commonwealth all the revenue derivable from customs and excise duties. The annual value of duties from these sources under the State tariffs was estimated at from £7,500,000 to £8,000,000. The Commonwealth would not, of course, require all that immense revenue to pay its way and it was part of the scheme of union that the Commonwealth should be entitled to apply only one-fourth of the net revenue from customs and excise for Federal purposes, and after debiting expenditure of L. P. 4 the transferred services should pay over the surplus revenue to the States, month by month, during the period of ten years. Let us see how this scheme worked out in actual practice. In the first year of Commonwealth history under the new tariff, from 30th June, 1901 to 30th June, 1902, the Treasurer's balance-sheet of revenue and expenditure was as follows: The following statement indicates the transactions of the Federal Treasurer for the year ended 30th June, 1903 : From the foregoing balance-sheets it will be seen that at any rate during the first two years the cost of the new system of Govern ment was well within the estimates of the Federalists. Costs and Expenses arising from Federation. The following is a statement of new expenditure for the year 1917-18 arising out of Federation and not from functions or services transferred from the States to the Commonwealth. They are compiled from the budget papers of September, 1918: Governor-General- Establishment Parliament Salaries, Ministers and members, expenses Including ordinary expenses, Audit Office, New works, buildings, sites, London Offices Department of the Treasury— Ordinary expenses, Land Tax Commissioner, Invalid and old-age pensions Maternity allowance 485,365 3,858,990 634,428 It will be seen that the foregoing statement does not include any of the ordinary expenditure in connection with the PostmasterGeneral's Department, the Department of Defence and the Department of Trade and Customs, which were transferred from the States to the Commonwealth. It includes provision for certain works, buildings, and sites, which expenditure has since 1904 been treated as Federal expenditure. It also includes the expenses in connection with the invalid and old-age pensions. Under the State system of old-age pensions in the year 1903, New South Wales paid £547,019 and Victoria paid £215,754, Total £762,773. Extraordinary Capital Expenditure. The following is a summary compiled from the budget papers of September 1918, showing the capital expenditure partly out of revenue and partly out of loan money on certain public works and institutions since the the establishment of the Commonwealth, interest on money expended not being included: A separate account is kept in the Treasury of all moneys raised by way of loan upon the credit of the Commonwealth. Such account is called the Loan Fund; Audit Act 1901-6, section 55. The Commonwealth did not directly borrow money from the public of Australia or from the Imperial Treasury until the commencement of the war in August 1914, but it borrowed and used public trust funds. The Naval Loan Act 1909 authorized the raising of a loan of £3,500,000 for the purpose of the naval defence of the Commonwealth; the money to be raised by the creation and issue of inscribed stock bearing interest not exceeding 5 per cent. with provision for a sinking fund. This Act was repealed in 1910. Up to the year 1911 the Commonwealth Government had met its public works expenditure out of revenue. In that year, however, the Commonwealth being faced with the heavy prospective cost of the Transcontinental Railway, the Federal Capital and Northern Territory, it was decided to initiate a Loan Fund similar to those of the States. The flotation of this fund was greatly assisted by the fact that the Treasury at this time held a large quantity of gold principally on behalf of the Australian Notes Account, at that time only just started. In 1911 the Commonwealth Inscribed Stock Act was passed providing the machinery and procedure necessary, and various loan Acts were passed authorizing the raising and application of loans for Federal purposes. The Commonwealth in taking over the Northern Territory from South Australia relieved that State of very heavy financial responsibilities. It assumed liability for the whole of the accumulated debt contracted by South Australia in its efforts to govern and develop the Territory. The Commonwealth also took over the debt on the Port Augusta-Oodnadatta railway. The debt on account of the Territory at 30th June, 1911, was £3,657,836 and on the railway £2,274,486. Total £5,932,322. As the securities fall in they are redeemed by the Commonwealth Government, the money required being taken from the Loan Fund. This debt is, therefore, a constantly diminishing one. Commonwealth pre-war borrowed money has been applied to the following among other Federal purposes. Railway Construction Kalgoorlie to Port Augusta; Darwin to Pine Creek. Loan Redemption-Port Augusta Railway, Northern Territory, Papua Railways and wharves. Post and telegraphs and telephones, purchase of land and London office, acquisition of land and buildings. |